The Super Guarantee: Keating's Great Big Tax on Everything

A submission by Prosper Australia* to theInquiry into the Mineral Resource Rent Tax Bill 2011 and related bills(Senate Standing Committee on Economics)

Abstract

We submit that:

A federally mandated, employer-funded superannuation contribution
of 9% of wages/salaries is equivalent to a federally funded
contribution paid for by a 9% federal payroll tax —
equivalent in every respect, except that the former arrangement
is off-budget so that its scale, inefficiency and
regressiveness can be kept out of the news. This hypocrisy should end:
compulsory superannuation, like any other tax-transfer program, should
be on-budget so that its targeting and funding are exposed to
public criticism.

The revenue from taxes on super-normal profits, being volatile, is
unsuitable for funding recurrent expenditure but eminently suitable
for diversion into superannuation.

The present combination of compulsory super contributions and the
GST is patently worse than an NZ-style “all-in”
consumption tax raising the same revenue. If the latter is too
terrible to contemplate, the former should be considered more so.

The revenue from a broad-based land-value tax, being reliable (the
more so because it promotes and stabilizes economic growth), is
capable of funding recurrent expenditure. In political terms it is
especially suitable for hypothecation for the age pension, because the
desire to avoid churning leads to a tax exemption for the principal
residences of persons of pensionable age.